Since it has become increasingly difficult for non-profits to raise the funds they need for their missions through traditional channels, such as fundraisers, grants and philanthropy, many non-profits are considering or have already made the move to include social enterprise into their revenue plan.
Social enterprise involves the selling of goods and services just like a commercial business, but for the common good as opposed to simply creating profit for an owner or shareholders.
It can be integrated into a nonprofit either as
1) a completely separate entity, independent from the mission and goals of the nonprofit
2) an integrated part of the nonprofit which actively generates funds based on the same mission and goals as the nonprofit, or
3) it can be structured so the social enterprise and nonprofit activities are one and the same entity. The social enterprise is created to serve its clients’ needs.
Have you considered creating additional revenue with a social enterprise venture? A large number of non-profits have already done so. Following are a few points to consider:
The pros of social enterprise
– When you obtain funding through a grant from a foundation or the government, you have to re-apply year after year in order to fund your operations. With a successful social enterprise, the income will continue to flow as long as your business remains viable.
– If an organization wants to try a different approach to the services that they provide, they may be limited to how they are able to use the money obtained through grants or philanthropy. Generating income independently allows non-profits to use the funds as they wish within their group’s goals.
– One of the greatest advantages that come from non-profit organizations that run a social enterprise is the fact that jobs are created. It could be paid on-the-job training that individuals can use for jobs in their community, or permanent employment for the very people that their mission serves.
– You can build a social enterprise from scratch, but if you already have some assets that can be optimized or monetized, even better: think technological assets like computers and software, a large social media following or recognized brand, underutilized space, a volunteer force that is open to new projects.
– A social enterprise endeavor can provide non-profit organizations with a platform to demonstrate the mission of their organization. For example, an organization that serves as an advocate for the social inclusion of those with mental health issues could operate a business that employs such individuals, supporting their independence within the community.
– Tax advantages allow you to compete head-on with for profit businesses.
Challenges when considering a social enterprise
– What excites you about your non-profit is the good that you’re doing. Creating a business venture may sound scary or utterly boring and be the last thing on your mind.
– In order to be successful in social enterprise endeavors, support staff and members of management may have to adjust their mindset. Those who have spent a great deal of time devoted to the mission of the organization may need to transition their way of thinking and learn to embrace the business side of the organization.
– You are starting a brand new business! As if running your non-profit wasn’t enough work already. (Read about hybrid organizations.)
– You may actually out-compete other non-profits, which may be good for your bottom line, but may not align with your mission and goals.
Social enterprises you already know
As someone who is raising funds you have likely heard of Network for Good. Not only do they provide a popular fundraising platform (also used by Causes on Facebook), but they also advise companies on their philanthropic goals and cause strategies.
Are you using the Firefox browser? Besides Firefox the Mozilla Foundation also promotes and supports an open and safe internet and various other software projects and provides grants for web and tech related non-profits and projects. They have tens of thousands of volunteers around the world to help with their software and millions of dollars in revenue. (More examples here, here, and here.)
The future: Donations or sales or both?
Studies show that more and more non-profit employees are not satisfied with their compensation and are looking for employment elsewhere. And consumer trends clearly still include socially conscious products and services.
Does this mean that non-profits run the ‘traditional’ way will become obsolete and building social enterprise into your organization will become necessary and mainstream? This case study of a non-profit shows the struggle and changes one organization went through to keep following their mission.
Today, many non-profits are protecting themselves against an uncertain future by becoming a social enterprise, or including social enterprise alongside their traditional non-profit practices.
Related: Recently Kickstarter became a PBC, a Public Benefit Corporation, which means it is now bound by law to make a “positive impact on society.”